Surplus expected to be bigger than May budget forecast
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The news: The federal budget ended 2023-2024 with $906.9 billion in gross debt, according to the Final Budget Outcome. This compares to about $1.056 billion of gross debt estimated in the Pre-Election Economic and Fiscal Outlook.
The numbers: The surplus is also due to be somewhat bigger than the $9.3 billion estimated at the time of the budget, following a $22 billion surplus the year before.
The lower debt than expected will save $4 billion in interest costs in 2023-2024, and around $80 billion over the next 10 years, on Treasury analysis circulated by the government.
The pre-election outlook in 2022 estimated that gross debt as a percentage of GDP would reach 44.6% in the last financial year. Instead, the data indicates it will hit 34%.
The context: Government spending has been the focus of intensifying scrutiny from commentators and the opposition, which has claimed the Albanese government's spending is leading to higher inflation. Public spending was the main reason the economy grew rather than contracted over the latest measured quarter, however the Reserve Bank has avoided laying blame on any fiscal policy decisions for inflation challenges.
The higher surplus in 2023-24 and improved debt position will be seized on by the government as signs of its responsible financial management and strength in steering the economy. This is especially the case as taxes were lower than anticipated at budget time but payments out are even lower, which has helped improve the bottom line.
What they said: "We’re the first government to post back-to-back surpluses in nearly two decades," Treasurer Jim Chalmers said in a statement.
"We don’t see a surplus as an end in itself but it’s an important way to take pressure off inflation, rebuild fiscal buffers during a time of global economic uncertainty and build a better foundation to fund our nation’s most pressing priorities."
Minister for Finance Katy Gallagher said in a statement that the government had been looking for "responsible savings and showing spending restraint".
"Having a stronger budget position means we can continue to deliver responsible cost of living relief while reducing inflationary pressures."
The source: Treasurer media release
